Indian government takes majority stake in Vodafone Idea
The Indian government will take a 36% in the fledgling Vodafone Idea after the operator’s board approved the conversion of dues into equity.
This development means that existing shareholders, including the company founders, will have their shares diluted.
Vodafone Group will now own 28.5% of the operator while Aditya Birla Group will have around 17.8%.
In August last year, the executive vice-chairman of the company at the time that owned 27% of the company said it was near the “point of collapse”.
The operator is the third-largest in India after Reliance Jio and Bharti Airtel.
Kumar Mangalam Birla had written to India’s cabinet secretary Rajiv Gauba saying he would be willing to hand over the stake to “any entity – public sector/government/domestic financial entity, or any other that the government may consider worthy of keeping the company as a going concern”.
A few days later, though, it was still on the brink despite a small rise in share prices.
Birla stepped down from his role but his company Aditya Birla Group retained 27% of Vodafone Idea although, this how now dropped by almost 10%.
At the time, Nick Read, CEO of Vodafone Group said that the UK-based company would not put anymore investment into Vodafone Idea, of which it owns 45%.
Vodafone Group’s own shares have dropped by 16.5% as a result of the Indian government’s interference.
Vodafone Idea’s financial health deteriorated after Reliance Jio Infocomm started a price war in 2016 and clinched market share to become the top player in the Indian market.